The major piece of regulation I want to see is turning credit reporting and scoring into regulated utilities. Right now, I want to fire my primary card provider for incompetence, but dare not, lest my FICO dip even lower.

Sad.

i can see how reasonable and reasonably cautious people can get ripped off by credit card terms that are not transparent or that involve large rate changes.

i can see a role for government in enforcing transparency certainly and for ensuring (to some extent, because it’s not totally possible) that the terms are not set up to hit someone very hard while they are going through unanticipatable difficulties.

but i don’t see a role for government in encouraging people to pay back debt or to get out of debt. it is reasonable for people and businesses to carry debt over a long period of time. people can make that choice, and i don’t think the government needs to have a stance on that one way or another.

So, traditional transparency won’t work. Just as you won’t improve eating habits by posting a standardized label on carrot cake saying that a portion has 1100 calories unless you’ve also trained your eater to realize that most of us can’t afford to eat even 2000 calories daily.

If you’ve ever known somebody who’s never dieted, you know that this individual often has no idea of what a normal calorie or fat allowance should look like. In order to be effective, labels must be combined with training.

When did you last see a public service announcement describing the actual cost of 18% or 28% interest on routine purchases made with a revolving charge? You see two types of communication–that aimed at the relatively sophisticated consumer who probably never engages in self-destructive financial behavior, and angry ranting aimed at less knowledgeable consumers who don’t understand the basics.

“if people had two credit cards they can get around minimum payments by paying them off with each other. or they would additional purchases on their credit card to conserve cash to pay their higher minimum balance.”

Yes, people can get around it, and people already do what you say. That does not mean that the proposal would not work.

A lot of people simply make the minimum payment, unless things are such that they feel that they can pay more. If the minimum goes up, most of them will continue to do the same thing. Others may charge more in order to have the cash to make higher payments, and either continue in that vein or take measures to reduce their balances.

People will adapt to higher minimum payments. And a good bit of that adaptation will be better financial discipline. The fact that some people will increase their debt load, and that some of them will do so indefinitely, does not mean that “it will not work”.

if people had two credit cards they can get around minimum payments by paying them off with each other. or they would additional purchases on their credit card to conserve cash to pay their higher minimum balance.